Recent “revelations” concerning the Lehman debacle highlighted a very important point: media and regulators alike have had their heads in the sand for decades. The headline of a recent article plainly makes the point: “Findings on Lehman Take Even Experts by Surprise.” If this is really true, it is quite an indictment on either the lack of intelligence or truthfulness of our regulators. Sadly, either one could be the case. Between lobbying dollars and entrenched interests, our financial regulatory regimes have become so perverted as to have little basis in reality. [A Business Insider blog author] recently penned an Op-Ed in the Financial Times where [he] made the point that all the clamor and criticism around derivatives was ill-founded, that financial transactions completely divorced from derivatives could and have caused even more damage than derivatives themselves. The Lehman example is a case in point. This is not a story about derivatives, no more than Enron was a story about derivatives. But the key take-away should be that if our rules and regulations are so porous as to allow transactions like Lehman’s to gain approval from their “blue chip” legal counsel and expensive “Big Four” accountants, then there is a serious problem with the state of our regulatory framework. The SEC is a highly politicized organization and the Financial Accounting Standards Board (FASB) is a kind of self-regulatory organization that is ultimately a stooge of industry. Do we need any more examples of the private sector’s inability “to fulfill the responsibility of public interest?” [The blogger] thinks not. The FASB has accumulated exceptional power and influence over the years, yet has merely served as an appendage of those whom it was supposed to be regulating.